Turning on the taps: JobKeeper hotlines, Australian loans, government aid and cash flow

For many small businesses, the past month has been the hardest they have ever faced. Revenue has dried up for some while others are surviving on a trickle. We hope those affected will find it reassuring to know that billions of dollars in government aid is in the pipeline.

Grants, subsidies, tax breaks and loan guarantees are among the relief coming. You may have read about some of these at our Business Continuity Hub. But the last type of help – loan guarantees – deserves further attention.

Under the Coronavirus SME Guarantee Scheme, the government has just named two dozen lenders that may extend federal-backed loans of up to $250,000. The government will guarantee 50 percent of new loans, which could make it easier for small businesses to qualify. The list of lenders should grow in the coming weeks.

In addition, major banks have committed to providing businesses that are eligible for JobKeeper payments with a faster way to access temporary financial assistance options.

A helping hand for JobKeeper eligible businesses

The government is providing critical financial support for eligible businesses and their employees through the JobKeeper stimulus package. With payments due to begin in May, one chief eligibility criteria is that businesses must have paid workers at least the minimum $1,500 fortnightly wage subsidy payments throughout April (the Commissioner has extended the time to enrol for the initial JobKeeper periods from 30 April 2020 until 31 May 2020).

Many small businesses are needing help with the cash gap as they pay staff JobKeeper payments before 8 May (at the latest) and pay their January to March quarterly superannuation guarantee payments before 28 April.

To ease the pressure on employers, ANZ, CBA, NAB and Westpac have expanded their support measures for businesses impacted by COVID-19. The creation of dedicated hotlines will enable customers to apply for loan funds ahead of JobKeeper payments becoming available (you can find the hotline numbers below). These special measures will help businesses continue to pay their staff during these challenging times.

Time is of the essence

Some of the lenders under the Coronavirus SME Guarantee Scheme are remarkable for their quick decisions and simple approach. While traditionally lenders have required stacks of paperwork and several weeks to process a loan application, some on the government’s list require no paperwork. The fastest among them can return a lending decision within a few hours and disburse money within one business day, thanks to integrations with accounting software.

But what if your recent financials aren’t stellar? You’re not alone. And thanks to the government’s loan guarantee, lenders should be offering even more support than usual to small businesses. Loans that are backed by the government also come with a repayment holiday, which means repayments are suspended for six months.

Explore your options

It’s worth bearing in mind that these are still loans. They do have to be repaid, in this case in up to three years. Borrowing money shouldn’t be your first resort when cash flow is strained, and you should talk to an accountant before deciding which options are best for you. But in these difficult times, they can be a welcome lifeline for some small businesses.

Because the government has just begun naming participants in its guarantee scheme, these lenders are preparing customised products that comply with the federal requirements and eligibility. Once their government-backed lending products are in place, we can expect updates on how to apply.

In the meantime, Moula, Prospa and NAB QuickBiz are three lenders that already integrate seamlessly with Xero. They also offer quick decisions on loan products outside of the government scheme. As with the government-backed loans, all of their loans are unsecured, which means you needn’t put up your home as collateral. Again, it’s worth discussing which loan type, if any, would best suit your situation.

These are uncertain times, and at Xero we’ll do our best to keep you updated about resources that may be of help. In particular we’ll be focusing on new areas that support the different lending options available and what you can do to be better ready for that process. You can read more about our current lending integrations here, and we invite you to join the conversation with other small businesses in our Business Continuity Hub.